top of page
  • Writer's pictureYB Wong Chen

Insignificant Macroeconomic Gains from TPPA


My office and I have read the PricewaterhouseCoopers (PwC) cost benefit report thoroughly and we have come to the following conclusion: the Trans-Pacific Partnership Agreement (TPPA) will not result in any significant trade or macroeconomic gains for Malaysia.

The PwC report provided macroeconomic outcomes for 4 scenarios. Scenario 1 is where we do not sign the TPPA and scenario 2 is where we sign the TPPA and tariffs are gradually reduced to zero over a 10 year period. Scenarios 3 and 4 are where non-tariff measures are reduced by 25% and 50% respectively over a 10 year period. Non-tariff measures are essentially protectionist measures such as subsidies, quotas, trade defence measures, export restrictions, and technical measures.

The macroeconomic results for scenarios 1 and 2 confirm our suspicions all along; that whether we sign or refuse to sign the TPPA, the macroeconomic projections for GDP and exports are almost the same with a maximum differential of 0.22%. On scenarios 3 and 4, which concerns reduction in non-tariff measures, PwC paints a slightly more positive outlook. However, it must be said that the basis to support these two slightly more positive outlooks are in fact very shaky.

How much more positive are scenarios 3 and 4? The answer is not much at all. If non-tariff measures are reduced by 25% to 50 % with the signing of the TPPA, the annual percentage growth contributed by TPPA to GDP is a mere 0.6%to 1.15%, whereas for export growth, the change of growth per annum is a miserable 0.54% to 0.9%. In other words, signing the TPPA, even in best case scenarios, is not going to give us a minimal boost of 2%.

The real surprise is the trade balance projections under these two best scenarios show significant deterioration compared to not signing the TPPA. If we don’t sign the TPPA, we will register a much higher trade balance in the year 2027 of USD42 billion compared to USD29.7 billion if we sign the TPPA and receive a 50% reductions in non-tariff measures.

So, even in the very best case scenario presented by PwC, Malaysia will only see a maximum 1.15% growth of GDP and 0.9 % in export but suffer a 30% reduction of trade balance. The conclusion in this matter is clear, the PwC cost benefit report does not support any significant macroeconomic justification for signing the TPPA.

In fact from an international trade balance perspective, it is worse for Malaysia. I therefore urge the International Trade and Industry Minister (MITI) to recognise and publicise the PwC findings and stop pretending that the TPPA is good for international trade or the Malaysian economy.

Since trade and economics are not the main drivers for TPPA, then surely political and geo-political considerations must be the prime motivating factors for PM Najib in pursuing the TPPA. Why is Najib bending his back to handover to the US our Parliamentary and sovereign rights for a few lousy dollars? Why is Najib so compliant to the American “Asian pivot” that does not benefit us economically?

Since politics is motivating this trade deal, I take the position that The TPPA should now be referred to PM Najib and the Foreign Minister to answer to the public, instead of the MITI minister.

Lastly, I congratulate PwC for a well prepared report and I wish to register my appreciation for their professionalism in preparing the report without fear or favour.

YB Wong Chen Member of Parliament for Kelana Jaya

6 January 2016


Die Kommentarfunktion wurde abgeschaltet.
bottom of page